Designed to provide broad exposure to the Consumer Staples – Food & Beverage segment of the equity market, the Invesco Food & Beverage ETF (PBJ) is a passively managed exchange traded fund launched on 06/23/2005.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Staples – Food & Beverage is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.
The fund is sponsored by Invesco. It has amassed assets over $247.64 million, making it one of the average sized ETFs attempting to match the performance of the Consumer Staples – Food & Beverage segment of the equity market. PBJ seeks to match the performance of the Dynamic Food & Beverage Intellidex Index before fees and expenses.
The Dynamic Food & Beverage Intellidex Index is comprised of stocks of 30 U.S. food and beverage companies.These are companies that are principally engaged in the manufacture, sale or distribution of food and beverage products, agricultural products and products related to the development of new food technologies.
When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.63%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.38%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Staples sector–about 95.10% of the portfolio.
Looking at individual holdings, Archer-Daniels-Midland Co (ADM) accounts for about 5.59% of total assets, followed by Pepsico Inc (PEP) and Kroger Co/the (KR).
The top 10 holdings account for about 45.23% of total assets under management.
Performance and Risk
The ETF has lost about -1.63% and is down about -0.29% so far this year and in the past one year (as of 09/01/2023), respectively. PBJ has traded between $42.01 and $48.41 during this last 52-week period.
The ETF has a beta of 0.63 and standard deviation of 14.81% for the trailing three-year period, making it a medium risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers.
Invesco Food & Beverage ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PBJ is a good option for those seeking exposure to the Consumer Staples ETFs area of the market. Investors might also want to consider some other ETF options in the space.
VanEck Future of Food ETF (YUMY) tracks —————————————- and the First Trust NASDAQ Food & Beverage ETF (FTXG) tracks Nasdaq US Smart Food & Beverage Index. VanEck Future of Food ETF has $2.51 million in assets, First Trust NASDAQ Food & Beverage ETF has $1.02 billion. YUMY has an expense ratio of 0.69% and FTXG charges 0.60%.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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